Working Paper: NBER ID: w26733
Authors: Oriana Bandiera; Michael Carlos Best; Adnan Qadir Khan; Andrea Prat
Abstract: We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives in a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. Time use data reveal agents’ responses vary along the same margin: autonomy increases the time devoted to procurement and this leads to lower prices only when monitors cause delays. By contrast, incentives work when monitors do not cause delays. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.
Keywords: Authority Allocation; Public Procurement; Field Experiment; Bureaucracy; Performance Pay
JEL Codes: D02; D04; D2; D23; D73; H1; H11; H57; H83; M42; M48; M52; O1; O12; O2; O23; O38; O53; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| granting autonomy to procurement officers (H57) | reduces prices (D40) |
| performance pay alone (J33) | reduces prices (D40) |
| granting autonomy to procurement officers (H57) | increases time devoted to procurement activities (H57) |
| increased time devoted to procurement activities (H57) | reduces prices (D40) |
| inefficient monitors (D61) | reduces effectiveness of performance incentives (J33) |